IndyMac Price Target Slashed to $2

March 27, 2008 No Comments »

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IndyMac Bancorp saw its price target cut to just two dollars by analysts Keefe, Brunette, and Woods today, who cited rising delinquencies and capital issues.

The firm said credit quality showed little signs of a turnaround, and noted that Alt-A foreclosures continue to rise at a steady clip.

Additionally, the brokerage said Indymac needs to raise more capital, and as a result, lowered its price to just two bucks from six dollars because of their perceived capital woes.

Earlier this month, the mortgage lender revealed that delinquencies had risen across the board in January, and that foreclosure and REO activity jumped from December.

Foreclosures measured in unpaid principal balance rose to 3.02 percent in January from 2.65 percent in December, while REOs increased to 1.12 percent from 0.93 percent a month earlier.

But just last week, CEO Michael Perry argued that raw delinquency data was largely misleading and meaningless, and noted that IndyMac’s Alt-A delinquency rate of 11.1 percent was still lower than the industry’s 13.1 percent rate.

The IndyMac chief noted that raw data doesn’t account for loan prepayments, velocity of production vs. size of servicing portfolio, and investor risk-based pricing, making conditions appear worse than in reality.

Shares of IndyMac were down 13 cents, or 2.17%, to $5.87 in late morning trading on Wall Street.

The stock has been trading rather erratically lately, rising from $5.17 to $6.96 on Tuesday and generally seesawing between this range for the last month.

There have been plenty of rumblings surrounding this company, ranging from a possible buyout to a potential bankruptcy filing.

(photo: brymo)

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